When the economy becomes uncertain and sales begin to decline, financial services companies must start making tough decisions about where to reduce costs.
But expenditures don’t stop during a recession. If you want to be resilient, the key is to identify where spending can best benefit your strategy, not to stop wholesale investment into your company.
Digital transformation investments are an opportunity for your company to make strategic investments and gain flexibility, even in an economic downturn when expenditures are tight. When aligned properly with your strategic plan and digital roadmap, they can help your company not only cope with recession but also prepare for the future.
Benefits of digital transformation for financial services
The main benefit of digital transformation is that it provides flexibility. You can use tailored digital investments to address your current challenges and prepare your business for continued growth.
For the financial services sector, this is especially true with on-premises technology infrastructure. Companies typically require lots of resources to maintain their legacy networks, both in terms of equipment and qualified personnel. But by switching to cloud services, you can eliminate that capital expenditure and make your organization more flexible.
Cloud services are scalable, meaning they will be able to adjust with you to better support newer technology as it becomes available. And most operate on a system of paying for the functionality you need, so your operational expenditure can scale as well.
Customer expectations also continue to grow in the digital age. Customers want easy, secure access to their accounts and your services through mobile and online platforms. They also expect answers in real-time without any duplicative or redundant information.
If your company wants to stay resilient and competitive, it needs to have the infrastructure in place to provide a better customer experience and continue adapting to new technology as it becomes the industry norm.
Choosing the right investments for your company
To get the most from your investments, you need to start by aligning them with your strategic plan and your digital roadmap. Any new technology is going to come with cost to your company, so it’s important to make data-driven decisions based on strategic alignment.
First, you need to understand how a new technology can align with the priorities outlined in your strategic plan. Take time to evaluate your progress on existing strategic priorities. The evaluation should be based on tangible metrics, such as customer data or your financial statements.
From there, consider what will help you realize those priorities. Look for services or products where you have high growth potential, high market share or can provide reliable cash flow into the company. You also want to look at what your current spending is and identify areas where technology can help you reduce operating costs.
Some options include:
- Upgrading your data and analytics to improve operations and drive down your efficiency ratio.
- Leveraging your existing data through analytics to improve customer experience.
- Allowing artificial intelligence to help with fraud mitigation or faster loan underwriting.
- Implementing a CRM to acquire new customer segments or next-generation customers.
You also need to check how investments align with your existing digital roadmap. Consider your roadmap’s end goal and the reality of where your organization currently is and then decide the logical next steps.
Your company may not be ready to jump straight into using artificial intelligence or leveraging data transformation tools. Instead, maybe the first step is to upgrade the way you manage your data.
During a recession, your company should be looking at technologies that allow you to be proactive instead of reactive. Rather than simply maintaining your current level, look for ways to better solve problems and deliver options for both your customers and your company.
Getting your leadership on board
The goal of leadership during a recession is to do what they can to sustain the organization for the long term — usually by cutting spending. But to be resilient, your company can’t stop evolving digitally.
When trying to secure support, you need to build your business case around the fact that these investments are not only critical for today but also for saving time and money in the future.
In looking at costs, it’s also important to recognize that there are a lot of opportunities for creative solutions with technology. Many software or technology services are available at different price points and levels of scalability.
You can work with vendors and consultants to ensure that you’re paying only for the functionality your company needs. That way you can start with smaller investments and continue to grow them as they provide value to your company.
How Wipfli can help
At Wipfli, our consultants take a holistic approach to helping you leverage data and technology, so that you can be confident in the longevity of your digital strategy. Contact us today for more on how we can help your financial services company transform.
This article is part of our series on how your financial services organization can use technology to build resilience. We cover the latest technologies and strategies to improve efficiency, engage customers and increase revenue in any economic conditions.
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